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loan rates ’

Mortgage rates, prior to June, were stabilizing after a volatile first quarter. Potential home buyers and existing homeowners were settling in to the fact that a 4.5% conventional mortgage rate could be had; some days you had to pay a couple of points, some days only one. FHA and VA loans were about an eighth of a percentage point higher.

Brighter days in the real estate market seemed inevitable.

Volatility hit the mortgage rates market like an unexpected tsunami. Here’s how it unfolded:

Upwards pressure quietly started about a week before Memorial Day. We figured the mortgage bond traders were taking some profits. No big deal; we recovered and rates came back down to the 4′s.

Last Monday, I awoke with a pit in my stomach; that “one thing” happened. I cautiously locked every loan in my pipeline; all at 5%. While I believed in my heart that rates would drop again, the risk seemed too great to play around. I privately thought the mortgage bond traders were just playing chicken with the Fed.

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